In a working document to which EUROPE has had access, the European Commission details its review of EU trade policy, which will be made public on Thursday 18 February.
The policy defines the concept of strategic autonomy and is divided into three main areas: the green and digital transition, rules-based trade at the global level that supports sustainable development and, finally, the EU’s ability to pursue its own interests and enforce its rules.
These objectives take the form of more or less concrete actions. The growing heft of the EU in international trade is ubiquitous in the presentation of this strategy. As far as partners and priorities are concerned, the choice of diversification is appropriate, even if the United States occupies a very special place. It is, however, very clear from this working paper that China remains a complex partner, against whom strength must first be built up.
Green transition and digital trade
The European Commission wants to use free trade agreements and multilateralism to achieve the objectives of the Green Deal. To this end, the chapters on trade and sustainable development (TSD) in trade agreements are of particular importance, although they still face the problem of their practical application.
The Commission says that implementation can be improved on the basis of complaints received by its Chief Trade Enforcement Officer (CTEO), Denis Redonnet. It does not mention the possibility of a sanction mechanism as a last resort, as requested by the European Parliament in its resolution adopted in November 2020 (see EUROPE 12608/1). The Commission refers, however, to the presentation of the revision of its 15-point action plan on the implementation of TSD chapters in trade agreements, which should be presented early this year.
On climate objectives, the Commission also confirms in this document that it will propose that the Paris agreement be “an essential element of future free trade agreements”. However, it does not impose this condition for agreements already concluded or under negotiation.
It also proposes that G20 countries concluding agreements with the EU adopt the objective of climate neutrality as soon as possible, in line with the recommendations of the Intergovernmental Panel on Climate Change (IPCC).
As regards the legislative tools that the EU intends to equip itself with or rely on to green its trade policy, these include the future Carbon Border Adjustment Mechanism (CBAM) to avoid carbon leakage abroad (see EUROPE 12650/7), future legislation on deforestation and the duty of care on the part of companies.
On the subject of digital, the Commission wants to push the World Trade Organization (WTO) to adopt rules on digital trade and intends to “play a key role in defining them”. It also wants to expand cooperation on digital technology with countries that share the same values, but also with strategic partners such as the Association of Southeast Asian Nations (ASEAN). Finally, it intends to focus on data protection and data transfer and to adopt an “open but assertive” approach. The European Commission announces the creation of a European analytical framework to measure the flow of data and assess the volume of these cross-border exchanges.
Rules-based international trade and sustainable development
For the European Commission, trade must be based on an effective system of rules with the WTO in the lead. This implies first and foremost the urgent need to reform the organisation and its dispute resolution system, which is an “immediate priority”. The paper also refers to the adoption of a series of WTO reforms aimed at sustainable development and distortions of competition.
On the side of trading partners, notably from Africa, the Commission will propose a new sustainable investment initiative. This may take the form of investment agreements or the modernisation of existing free trade agreements.
The Commission also announces that it will push for the creation of a Multilateral Investment Court within the UN Commission on International Trade Law to settle investment disputes.
In terms of standards, according to the Commission, the EU will have to be more proactive on the international scene to promote its standards. This requires more strategic regulatory choices upstream and the creation of synergies between internal and external policies. Privileged partners could be useful in this framework, and the transatlantic relationship is of paramount importance. The proposal of a EU-US Technology and Trade Council, which the Commission presented in December (see EUROPE 12614/4), would be a very good example of this if it came to fruition.
The EU’s ability to pursue its own interests and enforce its rules
The Commission wants to do more to serve the Union’s interests on the world stage. This means giving priority to the new relationship with the United States, but also diversifying trading partners. Neighbouring countries, those of the Eastern Partnership and the African continent represent strategic opportunities not to be missed, according to the institution. It also suggests using tools such as ‘aid for trade’ to help developing countries comply with the rules of trade agreements.
Concerning the implementation of the agreements, here again, CTEO Denis Redonnet must play a fundamental role in the monitoring of free trade agreements. The update of the Regulation on the exercise of commercial rules (see EUROPE 12657/21) goes in this direction and extends the scope of EU action against unfair practices.
Finally, to complete its toolbox, the Commission will publish a proposal to counter coercive action by non-Member States and another on foreign subsidies on the European market.
Furthermore, it calls on the EU Council to make urgent progress on the instrument on international public procurement, in order to enable European companies to access public procurement markets without discrimination in non-Member States.
It should be noted that the communication to which EUROPE has had access is a preparatory document for the communication to be published on 18 February. It is therefore subject to change.
Expectations
The publication of the trade policy review is eagerly awaited by businesses and their representatives.
The employers’ federation BusinessEurope, for example, hopes to see “a strong focus on the relationship with our two major trading partners the US and China” and on the rules governing open trade in general.
On the European Parliament side, the Chairman of the Committee on International Trade (INTA), Bernd Lange (S&D, Germany), considers that clear objectives—consistent with fair and sustainable globalisation—are necessary. On the strategy to be adopted with regard to the various trading partners, he considers that the EU must “stick to our interests. No foreign forces should determine our decisions”, he told EUROPE.
Finally, his French colleague Marie-Pierre Vedrenne (Renew Europe) hopes that: the conclusion of trade agreements is no longer the EU’s primary prism and that the Union will make progress on the implementation of these agreements”.
The European Commissioner for Trade, Valdis Dombrovskis, will present the strategy to MEPs on 24 February. (Original version in French by Léa Marchal)